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How to perform an efficient insurance Business Process Review (BPR)

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The current economic climate and the adoption of digital channels by consumers is encouraging insurers to rethink the interactions they are having with their customers. Both customer expectations and the need of the hour demand that insurance products be sold like others customer-centric services.

Within this context, it is highly recommendable for insurers to step back from business as usual and perform an in-depth Business Process Review (BPR). As Taiichi Ohno (father of the Toyota Production System) rightly said:

Progress cannot be generated when we are satisfied with existing situations.

So, it’s time for progress and in this blog post, we are going to propose a framework to review customer-facing insurance processes. This framework will help organisations to build a solid business case that drives resulting improvements in customer experience and operational costs and is also incorporated into the Spixii performance assessment for customer-facing processes.

When to perform the review

Honest answer? As often as possible. The true answer varies from business to business, but at least once a year is a rule of thumb. Analysing and challenging the way processes work always generates value.

In the insurance industry there are many signs that point to the need of BPR. Among them are low customer engagement, satisfaction or retention with complaints and negative feedback. Other signs are high operating costs, clunky processes with slow processing time and low data quality with difficulty to handle them.

Most of the time, the underlying problem that generates all of the above as a waterfall is an IT infrastructure that heavily relies on legacy systems.

How to perform the review

Completing the business review is a matter of the following three steps:

  1. Get a holistic view of customer-facing processes
    The first step is to get things in perspective, therefore it will be wise to start wide and gradually zoom in on single processes. This will help avoid working in silos and generating unfitting solutions.
    Even when the process selected for review is a single one, it is essential to draw a clear picture of it within the wider processes ecosystem, identifying touchpoints and relationships among them.
    The suggestion is to pursue an organisation-wide view, and to build an overview of the main processes with their basic flow and intertwinings.
  2. Perform a gap analysis
    Identify inefficiencies such as redundant and duplicate processes, double-handling of data, hiccoughs and bottle-necks.
    Most of the time, such problems are hidden from superficial high-level analysis, therefore it is a good practice to directly interview staff involved in such processes to get some realistic and in-depth insights. The focus is to get them to describe and then show how they perform their tasks and how their job relates to the process and tools used. At this stage, real pain points and opportunities will start to emerge.
  3. Trim the tree
    After acquiring a thorough view of processes, it is time to examine which of them are not required or are not producing what they should in terms of output.
    It is quite normal to find overlapping processes, or even different teams working on the same process. In such a scenario, extraneous work and processes need to be either redirected or completely eliminated.

How to build the business case

The creation of the business case can be completed in three steps again. These are:

  1. Identify potential areas of improvement
    This step often involves conducting desktop research to get an idea about the status of the market and to get inspiration from it. While it usually involves a competitor analysis, that’s not all it is. A good suggestion is to look at completely different industries since the best solutions can arrive from there. This approach inspires unprecedented solutions that challenge and improve the status quo.
    Another recommended research is around solution partners. Rome wasn’t built in a day: it is good to speed up transformation through adoption of partner solutions. When the process inefficiencies are clearly defined, it’s a good practice to look for industry-specific existing solutions and critically compare them against the problems identified. If there is a match between process inefficiencies and partner solutions, discussion can be initiated.
    As one of the main focuses of this analysis is to reduce operating costs, it’s recommended to brainstorm how to streamline processes through automation. Also, as already covered in one of the previous Spixii blogs ‘How to choose the right insurtech collaborator’, look out for the companies that provide continuous improvement through data-driven insights.

  2. Build a proof of concept and assess the potential value
    Once the overall customer-facing process environment is analysed along with its weaknesses, it is time to select a specific process. As an example, one could select the first notification of loss for claims (FNOL). The analysis might have highlighted a low performance of call centers rooted in high operational costs and poor customer satisfaction due to long wait times over the phone. While the current process might suit complex claims, it is not justified for simple claims.
    Next, draft the new process. The research might have highlighted some solution partners within the automation industry, such as RPA (Robotic Process Automation) or CPA (Conversational Process Automation) providers. The idea here is to build new process options (that might include solution partners) according to business requirements.
    Once the selection is made, it’s time to build a project plan with a cost estimate for implementing the changes, along with quick-wins and long-term goals.

  3. Create a center of excellence
    The process is now drafted. The next key action is to ensure a continuous improvement loop based upon data to successfully measure and diagnose its performance. Examples of improvement loops include customer feedback collection, both quantitative (e.g. TNPS - Transactional Net Promoter Score or CSAT - Customer Satisfaction)  and qualitative feedback (e.g. verbatim feedback). Look out for the insurtech partners able to provide richer insights on customer demographics and behavioural analytics.
    If you can’t measure it, you can’t improve it (Peter Drucker). At this stage, success metrics and key performance indicators (KPI) are set. It’s also advisable to set up recurring checkpoints to review performance of the new process with criticalities and improvement opportunities.

Final thoughts

A good business process review can be painful and expensive as it will bring multiple problems to light. This is not a matter of despair since identifying problems is half-way to solving them for success. Another set of words by Taiichi Ohno’s words illustrates this: 

Having no problems is the biggest problem of all.

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